ASIC has announced it has extended, for 12 months (until 31 March 2023), the transitional relief for foreign financial service providers (FFSPs) from the need to hold an Australian financial services (AFS) licence, pending the outcome of the Australian Government's consultation about the regulation of FFSPs.
This follows on from the Australian Government’s announcement on 11 May 2021 that it would consult on options to restore previously well-established regulatory relief for FFSPs dealing with wholesale clients in Australia.
While we welcome ASIC’s announcement, it is unfortunate that the ‘sufficient equivalence’ relief has not been re-opened to new FFSPs whom have never relied on that regime previously. This will mean those FFSPs who cannot rely on the ‘sufficient equivalence’ relief (i.e. because they are not currently relying on it) may have to apply for a standard or foreign AFS licence should they wish to commence business in Australia prior to the finalisation of Treasury’s consultation process and the commencement of the new changes to the FFSP regulatory regime.
Further details about ASIC’s announcement and the extension is below.
The instrument
ASIC Corporations (Amendment) Instrument 2021/510 has been made to give effect to the extension of the transitional period. Specifically, it amends the following ASIC instruments (which contain the existing ‘sufficient equivalence/passporting’ relief, the ‘limited connection’ relief and the ‘CSSF-regulated FFSP’ relief) to insert the 31 March 2023 end-date:
- ASIC Corporations (Repeal and Transitional) Instrument 2016/396;
- ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109; and
- ASIC Corporations (Foreign Financial Service Providers – Limited Connection) Instrument 2017/182.
This means that FFSPs who currently rely on, or wish to rely on, the ‘limited connection relief’ to provide financial services to wholesale clients in Australia can continue to do so until 31 March 2023.
Similarly, this extension allows FFSPs that are currently relying on the ‘sufficient equivalence’ relief to continue relying on that relief to service Australian wholesale clients until 31 March 2023. However, unlike the ‘limited connection’, the ‘sufficient equivalence’ relief is not able to be relied upon by a FFSP that is not already currently relying on that relief.
Funds management relief delayed
The ASIC Corporations (Amendment) Instrument 2021/510 also delays the commencement of the ASIC Corporations (Foreign Financial Service Providers – Funds Management Financial Services) Instrument 2020/199 until 1 April 2023. That instrument was created to give licensing relief to FFSPs that provide ‘funds management financial services’ to certain categories of Australian professional investors. You can find more information about the funds management relief here.
Existing and new FFSP licence applications
ASIC has also announced:
- they will pause their assessment of licence applications lodged by FFSPs unless they are specifically requested to proceed by the applicant; and
- during the extended transitional period, ASIC will consider new applications for individual temporary licensing relief or new standard or foreign AFS license applications if the applicant cannot rely on the extended transitional relief.
ASIC has stated that FFSPs who have been or are granted a foreign AFS licence will be able to continue to operate under the licence issued by ASIC pending any changes arising from the Government's consultation.
We will be sure to provide any further details about this regulatory change, including analysis on the proposals put forward by Treasury for consultation, when they come to hand.
[Sources: ASIC Corporations (Amendment) Instrument 2021/510; ASIC media release 11/06/2021]
